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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D/A
Under the Securities Exchange Act of 1934 (Amendment No. 1)*
MESA Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
590911103
(CUSIP Number)
Kenneth A. Hersh
777 Main Street, Suite 2700
Fort Worth, Texas 76102
(817) 820-6600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 18, 1996
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box. [ ]
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
*The remainder of the cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
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CUSIP NO. 590911103 SCHEDULE 13D
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(1) Names of Reporting Persons S.S. or I.R.S. Identification
Nos. of Above Persons
DNR-MESA HOLDINGS, L.P.
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(2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) [ ]
(b) [ ]
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(3) SEC Use Only
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(4) Source of Funds (See Instructions) OO (See Item 3)
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(5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
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(6) Citizenship or Place of Organization DNR-MESA HOLDINGS,
L.P. IS A LIMITED
PARTNERSHIP FORMED
UNDER THE LAWS OF
THE STATE OF TEXAS.
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(7) Sole Voting Power 60,000,419 (1)
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Number of
Shares (8) Shared Voting Power 0
Beneficially ------------------------------------------------
Owned by
Each (9) Sole Dispositive Power 60,000,419 (1)
Reporting ------------------------------------------------
Person With:
(10) Shared Dispositive Power 0
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(11) Aggregate Amount Beneficially Owned by Each Reporting
Person 60,000,419
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) [ ]
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(13) Percent of Class Represented by Amount in Row (11)
48.3% (2)
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(14) Type of Reporting Person (See Instructions) PN
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(1) As exercised through its sole general partner, Rainwater,
Inc., a Texas corporation.
(2) Based on the 64,279,568 shares of Common Stock outstanding
as of November 13, 1996, plus the 60,000,419 additional shares
of Common Stock issuable upon the conversion of all of the
Partnership's shares of Series B 8% Cumulative Convertible
Preferred Stock of the Issuer.
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The Schedule 13D filed by the Reporting Person with the Securities
and Exchange Commission on July 11, 1996 is hereby amended as follows:
ITEM 1. SECURITY AND ISSUER.
No modification.
ITEM 2. IDENTITY AND BACKGROUND.
No modification.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Mr. Rainwater has fully repaid, using personal assets, the
$53,170,000 borrowed under the Credit Line.
ITEM 4. PURPOSE OF TRANSACTION.
All references to the Standby Commitment are modified by the fact
that the Partnership ultimately was not obligated to purchase any shares
pursuant to the Standby Commitment prior to its termination.
By virtue of the right of each share of Series B Preferred Stock to
convert into one share of the Common Stock, the Partnership currently has
beneficial ownership of 60,000,419 shares, or 48.3%, of the outstanding
shares of the Common Stock.(3)
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Partnership. The Partnership is the beneficial owner of
60,000,419 shares of Common Stock. Based on the number of shares of Common
Stock issued and outstanding as of November 13, 1996, as contained in the
Issuer's most recently available filing with the Securities and Exchange
Commission, the Partnership is the beneficial owner of approximately 48.3%
of the outstanding shares of Common Stock.
Rainwater, Inc. Rainwater, Inc. may, as the sole general partner of
the Partnership, be deemed to be the beneficial owner of all 60,000,419
shares of Common Stock beneficially owned by the Partnership which
constitute (based on the number of shares of Common Stock issued and
outstanding) approximately 48.3% of the outstanding shares of Common Stock.
(3) To comply with Rule 13d-3(d)(1)(i), promulgated by the Securities
and Exchange Commission pursuant to Section 13(d) of the Securities
Exchange Act of 1934, the Partnership has calculated its 48.3% beneficial
ownership interest by dividing: (1) 60,000,419 shares of Series B Preferred
Stock, which includes the shares initially acquired by the Partnership plus
the 1,150,862 shares received on September 30, 1996 as a regular quarterly
PIK Dividend on the Series B Preferred Stock, by (2) 60,000,419 shares of
Common Stock issuable upon conversion of the Partnership's Series B
Preferred Stock plus the 64,279,568 shares of Common Stock outstanding as
of November 13, 1996. Please note that this required method of calculation
may differ from the basis for calculating the percentage ownership of the
Issuer's securities represented by the Series B Preferred Stock as set
forth in other public filings relating to the transactions described
herein.
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Richard E. Rainwater. Richard E. Rainwater may, as sole shareholder
of Rainwater, Inc., be deemed to be the beneficial owner of all 60,000,419
shares of Common Stock beneficially owned by the Partnership, of which
Rainwater, Inc. is the sole general partner. Such 60,000,419 shares of
Common Stock constitute approximately 48.3% of the outstanding shares of
Common Stock.
(b) The Partnership. Through Rainwater, Inc., its general partner,
the Partnership has the sole power (and no shared power) to vote or direct
the vote or to dispose or direct the disposition of 60,000,419 shares of
Common Stock.
Rainwater, Inc. As the sole general partner of the Partnership,
Rainwater, Inc. has the sole power (and no shared power) to vote or direct
the vote or to dispose or direct the disposition of 60,000,419 shares of
Common Stock.
Richard E. Rainwater. As the sole shareholder of Rainwater, Inc.,
Richard E. Rainwater has the sole power (and no shared power) to vote or
direct the vote or dispose or direct the disposition of 60,000,419 shares
of Common Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SECURITIES OF THE ISSUER.
On November 18, 1996, an Amended and Restated Agreement of Limited
Partnership of DNR-MESA Holdings, L.P., dated as of November 8, 1996, was
executed and delivered by all of the partners of the Partnership. This
agreement amends and restates the original Agreement of Limited Partnership
in its entirety. Among other things, the amended agreement reflects the
admission of certain parties as new limited partners, reflects the
modification of the required capital contributions of the partners
following the termination of the Standby Commitment, and reflects the
creation of a profits interest granted to a new limited partner. See
Exhibit 10.1 attached hereto for a complete copy of the Amended and
Restated Agreement of Limited Partnership.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 10.1 - Amended and Restated Agreement of Limited
Partnership of DNR-MESA Holdings, L.P., dated
as of November 8, 1996
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
Date: November 27, 1996 DNR-MESA HOLDINGS, L.P.
By: Rainwater, Inc., its Sole General
Partner
By: /s/ Kenneth A. Hersh
------------------------------
Kenneth A. Hersh,
Vice President
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EXHIBIT INDEX
Exhibit Description
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10.1 Amended and Restated Agreement of Limited
Partnership of DNR-MESA Holdings, L.P.,
dated as of November 8, 1996.
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EXHIBIT 10.1
Amended and Restated Agreement of Limited Partnership
of DNR-MESA Holdings, L.P., dated as of November 8, 1996
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
------------------------
DNR-MESA HOLDINGS, L.P.
------------------------
Dated as of November 8, 1996
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THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. WITHOUT REGISTRATION, THESE SECURITIES MAY NOT BE
SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER,
EXCEPT ON DELIVERY TO THE PARTNERSHIP OF AN OPINION OF COUNSEL SATISFACTORY TO
THE GENERAL PARTNER OF THE PARTNERSHIP TO THE EFFECT THAT ANY TRANSFER WILL NOT
BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER. ADDITIONALLY,
ANY SALE OR OTHER TRANSFER OF THESE SECURITIES IS SUBJECT TO CERTAIN
RESTRICTIONS THAT ARE SET FORTH IN THIS AGREEMENT.
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TABLE OF CONTENTS
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ARTICLE I
FORMATION OF PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1. Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.3. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4. Places of Business; Registered Agent; Names and Addresses of
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.5. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.6. Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.7. Title to Partnership Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
DEFINITIONS AND REFERENCES . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2. References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.1. Capital Contributions of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.2. Additional Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.3. Failure to Make Additional Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.4. Return of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.1. Allocations of Profits and Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.2. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.1. Power and Authority of General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2. Duties and Services of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.3. Liability of Partners and Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.4. Contracts with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.5. Reimbursement of General Partner; Success Fee . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.6. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.7. Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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SECTION 5.8. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.9. Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.10. Withdrawal by the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.11. Certain Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI
RIGHTS OF LIMITED PARTNERS . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.1. Rights of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.2. Limitations on Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.3. Liability of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.4. Withdrawal and Return of Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII
BOOKS, REPORTS AND MEETINGS . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.1. Capital Accounts, Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.2. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.3. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.4. General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION . . . . . . . . . . . . . . . . . . 22
SECTION 8.1. Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8.2. Reconstitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8.3. Liquidation and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IX
ASSIGNMENTS OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9.1. Assignment by Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE X
REPRESENTATIONS AND WARRANTIES; POWER OF ATTORNEY . . . . . . . . . . . . . . . 26
SECTION 10.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10.2. Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.2. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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SECTION 11.3. Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.4. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.5. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.6. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.7. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 11.8. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 11.9. Section 83(b) Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 11.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
DNR-MESA HOLDINGS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
"Agreement") dated as of November 8, 1996, is made by and among Rainwater,
Inc., a Texas corporation, as the general partner (the "General Partner"), and
the persons set forth on the signature pages and Exhibit A to this Agreement as
the limited partners (individually a "Limited Partner" and collectively, the
"Limited Partners").
W I T N E S S E T H:
WHEREAS, the General Partner and certain of the Limited Partners
(collectively, the "Original Partners") are parties to that certain Agreement
of Limited Partnership dated as of April 25, 1996, as amended (the "Original
Agreement"), organizing the Texas limited partnership known as DNR-MESA
Holdings, L.P. (the "Partnership"); and
WHEREAS, the Partnership has the obligation to provide certain
analysis and consulting services to MESA pursuant to the terms of the Stock
Purchase Agreement; and
WHEREAS, the Partnership has assisted MESA in obtaining the services
of Jon Brumley as Chairman of the Board, President and Chief Executive Officer
of MESA, and Jon Stewart Brumley as Director-Corporate Planning of MESA (Jon
Brumley and Jon Stewart Brumley are referred to herein as the "Brumleys"), and
the Brumleys will assist the Partnership in providing the requisite analysis
and consulting services to MESA; and
WHEREAS, the General Partner and the Original Limited Partners desire
to create the Profits Interest in the Partnership and issue the Profits
Interest to Brumley Partners, a Texas general partnership consisting of the
Brumleys as its partners; and
WHEREAS, effective as of the date of this Agreement, the Partners
desire to amend and restate the Original Agreement in its entirety in order to
(i) reflect the creation of the Profits Interest, (ii) admit Brumley Partners
as an additional Limited Partner and (iii) reflect the consummation of the
transactions contemplated by the Stock Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, provisions and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to reflect the intentions of the parties as set
forth above, the Partners hereby agree to amend and restate the Original
Agreement in its entirety as follows:
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ARTICLE I
FORMATION OF PARTNERSHIP
SECTION 1.1. Formation. Subject to the provisions of this Agreement,
the parties do hereby continue the Partnership, which shall be considered and
construed as a limited partnership pursuant to the provisions of the Texas
Revised Limited Partnership Act, Article 6132a-1, Vernon's Texas Civil Statutes
(the "Act").
SECTION 1.2. Name. The name of the Partnership shall be DNR-MESA
Holdings, L.P. Subject to all applicable laws, the business of the Partnership
shall be conducted in the name of the Partnership unless under the law of some
jurisdiction in which the Partnership does business such business must be
conducted under another name or unless the General Partner determines that it
is advisable to conduct Partnership business under another name. In such a
case, the business of the Partnership in such jurisdiction or in connection
with such determination may be conducted under such other name or names as the
General Partner shall determine to be necessary. The General Partner shall
cause to be filed on behalf of the Partnership such partnership or assumed or
fictitious name certificate or certificates or similar instruments as may from
time to time be required by law.
SECTION 1.3. Business. The business of the Partnership shall be (a)
to enter into and perform its obligations under the Stock Purchase Agreement,
(b) to purchase or otherwise acquire, to hold, and to sell or otherwise dispose
of, the Preferred Stock, the Common Stock and/or other Securities of MESA,
including each and every kind of security, whether recourse or nonrecourse to
MESA and without regard to whether such Securities are publicly traded, readily
marketable or restricted as to transfer or resale, (c) to exercise all rights,
powers, privileges and other incidents of ownership or possession with respect
to, the Securities of MESA held or owned by the Partnership, including but not
limited to the conversion of the Preferred Stock, and to carry Securities of
MESA in the name of the Partnership or the name of a nominee, (d) to provide
continuing analysis and consulting assistance to MESA during the course of the
Partnership's investment, and (e) to do all other acts and things necessary,
incidental or convenient to carry on the Partnership business as contemplated
by this Agreement.
SECTION 1.4. Places of Business; Registered Agent; Names and
Addresses of Partners.
(a) The address of the principal United States office and place of
business of the Partnership and its street address shall be 777 Main Street,
Suite 2700, Fort Worth, Texas 76102. The General Partner, at any time and from
time to time, may change the location of the Partnership's principal place of
business and may establish such additional place or places of business of the
Partnership as the General Partner shall determine to be necessary or
desirable.
(b) The registered office of the Partnership in the State of Texas
shall be 777 Main Street, Suite 2700, Fort Worth, Texas 76102, and the
registered agent for service of process on
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the Partnership shall be Kenneth A. Hersh, whose business address is the same
as the Partnership's registered office. The General Partner, at any time and
from time to time, may change the Partnership's registered office or registered
agent or both by complying with the applicable provisions of the Act, and may
establish, appoint and change additional registered offices and registered
agents of the Partnership in such other states as the General Partner shall
determine to be necessary or advisable.
(c) The General Partner is the sole general partner of the
Partnership. The General Partner's mailing address and the street address of
the General Partner's business is 777 Main Street, Suite 2700, Fort Worth,
Texas 76102.
(d) The mailing address and street address of each of the Limited
Partners are set forth below the signature of each Limited Partner on their
respective signature pages to this Agreement.
SECTION 1.5. Term. The Partnership was formed and commenced upon the
completion of filing for record the initial certificate of limited partnership
of the Partnership with the Secretary of State of the State of Texas and shall
continue until terminated in accordance with Article VIII.
SECTION 1.6. Filings. Upon the request of the General Partner, the
Limited Partners shall promptly execute and deliver all such certificates and
other instruments conforming hereto as shall be necessary for the General
Partner to accomplish all filing, recording, publishing and other acts
appropriate to comply with all requirements for the formation and operation of
a limited partnership under the laws of the State of Texas and for the
qualification and operation of a limited partnership (or a partnership in which
the Limited Partners have limited liability) in all other jurisdictions where
the Partnership shall propose to conduct business. Prior to conducting business
in any jurisdiction, the General Partner shall use its reasonable good faith
efforts to cause the Partnership to comply with all requirements for the
qualification of the Partnership to conduct business as a limited partnership
(or a partnership in which the Limited Partners have limited liability) in such
jurisdiction.
SECTION 1.7. Title to Partnership Property. All property owned by the
Partnership, whether real or personal, tangible or intangible, shall be deemed
to be owned by the Partnership as an entity, and no Partner, individually,
shall have any ownership of such property. The Partnership may hold its
property in its own name or in the name of a nominee which may be the General
Partner or any of its affiliates or any trustee or agent designated by it.
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ARTICLE II
DEFINITIONS AND REFERENCES
SECTION 2.1. Defined Terms. When used in this Agreement, the
following terms shall have the respective meanings set forth below:
"Act" shall have the meaning assigned to such term in Section 1.1.
"Adjusted Capital Account" shall mean the capital account maintained
for each Partner as provided in Section 7.1(b), (a) increased by (i) the amount
of any unpaid Capital Contributions agreed to be contributed by such Partner
under Article III, if any, (ii) an amount equal to such Partner's allocable
share of Minimum Gain as computed on the last day of the fiscal year in
accordance with the applicable Treasury Regulations, and (iii) the amount of
Partnership liabilities allocable to such Partner under Section 752 of the
Internal Revenue Code with respect to which such Partner bears the economic
risk of loss to the extent such liabilities do not constitute Partner
Nonrecourse Debt, and (b) reduced by (i) the amount of all losses and
deductions reasonably expected to be allocated to such Partner in subsequent
years under Sections 704(e) (2) and 706(d) of the Internal Revenue Code and
Treasury Regulation Section 1.751-1(b)(2)(ii)(d), and (ii) the amount of all
distributions reasonably expected to be made to such Partner to the extent they
exceed offsetting increases to such Partner's capital account that are
reasonably expected to occur during (or prior to) the year in which such
distributions are reasonably expected to be made.
"Annual Fee" shall mean that certain annual fee in the amount of
$400,000 payable by MESA to the Partnership for so long as the Minimum
Ownership Condition is satisfied, which fee is due quarterly in arrears
beginning September 30, 1996 (adjusted pro-rata for any period which is less
than a full quarter).
"Capital Contributions" shall mean for any Partner at any particular
time the aggregate of the dollar amounts of any cash contributed to the capital
of the Partnership, or, if the context in which such term is used so indicates,
the dollar amounts of cash agreed to be contributed by such Partner to the
capital of the Partnership.
"Commencement Date" shall mean August 22, 1996.
"Common Stock" shall mean shares of common stock, par value $.01 per
share, of MESA owned or to be acquired by the Partnership in the event that the
Partnership shall convert shares of the Preferred Stock.
"Employment Agreement" shall mean that certain employment agreement
effective as of the Commencement Date by and between MESA and Jon Brumley.
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"Fair Market Value" as of any date shall be determined by using the
following method:
(a) Securities for which market quotations are available
shall be valued at their closing sale price on such date (or, if on
such date securities markets were closed, then the last preceding
business day on which they were open).
(b) Securities traded on the over-the-counter market for
which no sales quotations are available generally shall be valued at
the closing bid price if held long or closing ask price if held short
on such date (or the last preceding business day if securities markets
were closed on such date).
(c) Securities generally traded on an established
securities market but for which no recorded sales information or
quotations of bid and asked prices are available on such date (or, if
applicable, the last preceding business day) shall be valued by the
General Partner in good faith with reference to (i) the most recently
reported sales or bid and asked prices, (ii) bid and asked price
information as of such date not generally reported but secured from a
reputable broker or investment banker, and (iii) such other
information as the General Partner believes in good faith is relevant.
(d) Any other Securities not listed or traded on any
exchange or on the over-the-counter market shall be considered as
having no ascertainable market value and shall be valued at the higher
of cost or fair value based on information available to the General
Partner regarding the value or worthlessness of such Securities.
(e) For purposes of this definition, sales and bid and
asked prices reported in newspapers of general circulation published
in New York, New York, or in standard financial periodicals or in the
records of securities exchanges or other markets, any one or more of
which may be selected by the General Partner and noted in its records,
shall be accepted as evidence of the price of a Security.
(f) A Security purchased, and awaiting payment against
delivery, shall be included for valuation purposes as a security held,
and the cash account shall be adjusted by the deduction of the
purchase price, including brokers' commissions or other expenses of
the purchase.
(g) A Security sold but not delivered pending receipt of
proceeds shall be valued at the net sales price.
(h) For the purpose of valuation of a Security, except a
Security sold but not delivered, it shall be unnecessary to deduct,
from the value determined above, brokers' commissions or other
expenses that would be incurred upon a sale thereof.
"General Partner" shall mean Rainwater, Inc., a Texas corporation, and
any person who becomes a substituted general partner of the Partnership
pursuant to the terms hereof.
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"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute or statutes.
"Limited Partners" shall mean the persons set forth on the signature
pages and Exhibit A to this Agreement as the Limited Partners, including the
holder of the Profits Interest, and any person who becomes an additional or a
substituted limited partner of the Partnership pursuant to the terms hereof.
"Majority Interest" of the Limited Partners, as to any agreement,
election, vote or other action of the Limited Partners taken as of any date,
shall mean one or more Limited Partners whose combined Sharing Ratios on such
date exceed the combined Sharing Ratios of all other Limited Partners on such
date.
"MESA" shall mean MESA Inc., a Texas corporation.
"Minimum Gain" shall mean (i) with respect to Partnership Nonrecourse
Liabilities, the amount of gain that would be realized by the Partnership if it
disposed of (in a taxable transaction) all Partnership properties that are
subject to Partnership Nonrecourse Liabilities in full satisfaction of
Partnership Nonrecourse Liabilities, computed in accordance with applicable
Treasury Regulations, or (ii) with respect to each Partner Nonrecourse Debt,
the amount of gain that would be realized by the Partnership if it disposed of
(in a taxable transaction) the Partnership property that is subject to such
Partner Nonrecourse Debt in full satisfaction of such Partner Nonrecourse Debt,
computed in accordance with applicable Treasury Regulations.
"Minimum Ownership Condition" shall have the meaning set forth in the
Statement of Resolution pursuant to which MESA shall establish and designate
the Preferred Stock.
"Partner Nonrecourse Debt" shall mean any nonrecourse debt of the
Partnership for which any Partner bears the economic risk of loss.
"Partners" shall mean the General Partner and the Limited Partners.
"Partnership" shall mean DNR-MESA Holdings, L.P., a Texas limited
partnership.
"Partner Nonrecourse Deductions" shall mean the amount of deductions,
losses and expenses equal to the net increase during the year in Minimum Gain
attributable to a Partner Nonrecourse Debt, reduced (but not below zero) by
proceeds of such Partner Nonrecourse Debt distributed during the year to the
Partners who bear the economic risk of loss for such debt, as determined in
accordance with applicable Treasury regulations.
"Partnership Nonrecourse Liabilities" shall mean nonrecourse
liabilities (or portions thereof) of the Partnership for which no Partner bears
the economic risk of loss.
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"Payout" shall be deemed to occur as of the first time that the Payout
Amount equals zero (0). The "Payout Amount" as of the Commencement Date shall
mean an amount equal to the Capital Contributions of the Limited Partners paid
prior to the Commencement Date pursuant to Section 3.1. "Payout Amount" shall
be calculated each day during the term of this Agreement, and as of the end of
any other day after the Commencement Date during the term hereof shall mean an
amount equal to:
(a) the Payout Amount as of the end of the immediately preceding
day, plus
(b) the product of the Payout Amount as of the end of the
immediately preceding day multiplied by 0.00021703864 (i.e., the equivalent
daily interest factor for an interest rate of eight percent (8%) per annum,
compounded quarterly), plus
(c) the additional Capital Contributions, if any, made by the
Limited Partners on such day pursuant to Section 3.2, minus
(d) the aggregate amount of any distributions made to the Limited
Partners on such day pursuant to Section 4.2 or Article VIII (provided that any
in kind distributions shall be valued at their respective Fair Market Values on
such day).
The Payout Amount shall never be less than zero (0).
"Permitted Transfer" shall mean an assignment or other transfer of the
Partnership interest of a Limited Partner to (i) any person in the "immediate
family" of such Partner, (ii) any trust the sole beneficiaries of which are
members of the "immediate family" of such Partner, (iii) the settlor or
beneficiary of any trust that is a Limited Partner, (iv) any other trust that
has the same settlor as such Partner, (v) those persons that are the partners
of a Limited Partner that is a partnership in connection with the withdrawal of
a person from such partnership or the liquidation and dissolution of such
partnership, or (vi) those persons that are the members of a Limited Partner
that is a limited liability company in connection with the withdrawal of a
person from such limited liability company or the liquidation and dissolution
of such limited liability company. For the purposes of the immediately
preceding sentence, the term "immediate family" shall mean the spouse, parents,
children, grandchildren, brothers, sisters, nieces or nephews of such Limited
Partner or such Limited Partner's spouse.
"Post-Payout Sharing Ratio" shall mean for each Partner its Sharing
Ratio after the occurrence of Payout.
"Pre-Payout Sharing Ratio" shall mean for each Partner its Sharing
Ratio prior to the occurrence of Payout.
"Preferred Stock" shall mean shares of Series B 8% Cumulative
Convertible Preferred Stock, par value $.01 per share, of MESA owned or to be
acquired by the Partnership, or in the event that the Minimum Ownership
Condition is no longer satisfied, the shares of Series A 8%
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Cumulative Convertible Preferred Stock, par value $.01 per share, of MESA into
which all shares shall be automatically converted.
"Profits Interest" shall mean a Partnership interest equal to a
Pre-Payout Sharing Ratio of 0% and a Post- Payout Sharing Ratio of 3.7594%
issued to Brumley Partners pursuant to this Agreement; provided that, the
Post-Payout Sharing Ratio shall be subject to adjustment as follows:
(a) The Profits Interest shall be increased by an additional
1.8797% if a Profits Interest Adjustment Event occurs during the
period commencing on the Commencement Date and continuing through
August 21, 1997.
(b) The Profits Interest shall be increased by an additional
1.1278% if a Profits Interest Adjustment Event occurs during the
period commencing on August 22, 1997 and continuing through August 21,
1998.
(c) The Profits Interest shall be decreased by 3.0075% in the
event that, prior to August 22, 1998, Jon Brumley's employment by MESA
is terminated for "cause" pursuant to the terms of the Employment
Agreement or is terminated as the result of any other event which is
not a Profits Interest Adjustment Event.
The Pre-Payout Sharing Ratio of the holder of the Profits Interest shall not be
subject to adjustment.
"Profits Interest Adjustment Event" shall mean either of the
following:
(a) Jon Brumley's employment by MESA is terminated (i) by
MESA, other than for "cause", or (ii) by Jon Brumley for "good
reason", in either event pursuant to the terms of the Employment
Agreement, or
(b) MESA consummates a substantial acquisition of assets or
stock or engages in a substantial merger or combination transaction in
which MESA (or a subsidiary of MESA) is the surviving entity. For
purposes hereof, an acquisition of assets or stock or a merger or
consolidation will be considered "substantial" (i) if the net value of
the oil and gas assets acquired, directly or indirectly, by MESA in
such a transaction is at least $750 million, as determined by MESA's
board of directors, or absent such board determination, by MESA's
investment bankers in the course of such transaction, or (ii) if such
transaction (of whatever magnitude) results in a significant change of
focus in the business or operations of MESA, as reasonably determined
by the General Partner.
"Securities" has the same meaning as set forth in Section 2(1) of the
Securities Act of 1933, as amended.
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"Sharing Ratio" shall mean for each Partner the proportion that its
interest in the Partnership bears to the total interests of all Partners in the
Partnership. The respective Sharing Ratios of the Partners shall be as follows:
(a) At all times during the term of the Partnership, the Sharing
Ratio of the General Partner shall be 1%.
(b) Prior to the occurrence of Payout, the Sharing Ratio for each
Limited Partner shall mean the percentage set forth opposite each
Partner's name on Exhibit A to this Agreement as the Pre-Payout
Sharing Ratio of such Limited Partner.
(c) Subsequent to the occurrence of Payout and assuming there has
been no adjustment in the calculation of the Profits Interest, the
Sharing Ratio for each Limited Partner shall mean the percentage set
forth opposite each Partner's name on Exhibit A to this Agreement as
the Post-Payout Sharing Ratio of such Limited Partner.
(d) In the event there has been an adjustment in the calculation
of the Profits Interest and the Post- Payout Sharing Ratio of Brumley
Partners, the Post-Payout Sharing Ratio for each Limited Partner other
than Brumley Partners shall be readjusted, and the General Partner
shall increase or decrease the Post-Payout Sharing Ratio of each
Limited Partner other than Brumley Partners by a percentage equal to
the product of (A) the unadjusted Post-Payout Sharing Ratio of such
Limited Partner divided by the aggregate Post-Payout Sharing Ratios of
all Limited Partners other than Brumley Partners (which is 95.2406 as
of the date of this Agreement) times (B) the percentage amount of such
increase or reduction in the Profits Interest, as applicable.
(e) In the event that any Limited Partner shall make additional
Capital Contributions to the Partnership pursuant to Section 3.2, the
General Partner may make an adjustment to the Sharing Ratios of the
Partners in accordance with Section 3.3(b).
(f) In the event that any Limited Partner shall assign any part of
its interest in the Partnership or in the event that the General
Partner shall admit an additional Limited Partner to the Partnership
in accordance with the terms of this Agreement, the General Partner
shall recalculate the respective Sharing Ratios of any or all of the
Limited Partners, as applicable, based upon the Partnership interest
so assigned or the terms pursuant to which such additional Limited
Partner was admitted to the Partnership.
"Stock Purchase Agreement" shall mean that certain Stock Purchase
Agreement dated April 26, 1996, entered into by and between MESA and the
Partnership, and any amendments thereof, pursuant to which the Partnership
acquired the Preferred Stock.
"Success Fee" shall have the meaning assigned to such term in Section
5.5(b).
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"Super Majority Interest" of the Limited Partners, as to any
agreement, election, vote or other action of the Limited Partners, shall mean
one or more Limited Partners whose combined Sharing Ratios equal or exceed 80%.
SECTION 2.2. References and Titles. All references in this Agreement
to articles, sections, subsections and other subdivisions refer to
corresponding articles, sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the
beginning of any of such subdivisions are for convenience only and shall not
constitute part of such subdivisions and shall be disregarded in construing the
language contained in such subdivisions. The words "this Agreement," "herein,"
"hereof," "hereby," "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly so
limited. Pronouns in masculine, feminine and neuter genders shall be construed
to include any other gender, and words in the singular form shall be construed
to include the plural and vice versa, unless the context otherwise requires.
ARTICLE III
CAPITALIZATION
SECTION 3.1. Capital Contributions of Partners.
(a) Each Partner shall have the obligation to make Capital
Contributions to the Partnership not to exceed the aggregate amount set forth
opposite such Partner's name on Exhibit A, which Capital Contributions shall be
used exclusively for the payment of the Partnership's purchase price for the
Preferred Stock purchased by the Partnership pursuant to the Stock Purchase
Agreement.
(b) All Capital Contributions required to be paid pursuant to this
Section 3.1 shall be used by the Partnership to purchase the Preferred Stock
pursuant to the Stock Purchase Agreement. In consideration for each Partner's
Capital Contributions, such Partner shall receive a Partnership interest equal
to its Sharing Ratio. Notwithstanding anything to the contrary contained
herein, the aggregate amount set forth opposite each Partner's name on Exhibit
A shall be the maximum contribution to the Partnership that such Partner shall
be required to make (unless such Partner otherwise elects as provided in
Section 3.2).
SECTION 3.2. Additional Capital Contributions. At any time after the
expenditure or commitment of the Capital Contributions referred to in Section
3.1, the General Partner may request each Partner to make additional Capital
Contributions to the Partnership in accordance with each Partner's Sharing
Ratio for the purpose of paying expenses of the Partnership in the event that
Partnership income is not sufficient to pay such expenses. No Partner shall be
obligated to make any such additional Capital Contributions unless and until
such time as each Partner agrees to make such additional Capital Contributions.
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SECTION 3.3. Failure to Make Additional Capital Contributions. In the
event that a Partner shall fail to make all or any portion of the additional
Capital Contributions requested at any time pursuant to Section 3.2, the
General Partner may elect to take any of the following actions:
(a) The General Partner may borrow funds in the name of the
Partnership for expenditure for the purposes described in Section 3.2; or
(b) The Partners electing to make such additional Capital
Contributions may pay their pro rata share of all of the additional Capital
Contributions which a Partner shall decline to make, and the General Partner
shall adjust the Sharing Ratios of the Partners so that subsequent to the
payment of each Partner's Capital Contributions, the Sharing Ratio of each
Partner shall equal the Capital Contributions made to the Partnership from
inception to date divided by the total of all Capital Contributions from
inception to date made by all of the Partners of the Partnership; or
(c) The General Partner may cause the Partnership and/or the
Partners to take such other actions upon which a Super Majority Interest of the
Limited Partners shall agree.
SECTION 3.4. Return of Contributions. No interest shall accrue on any
contributions to the capital of the Partnership and no Partner shall have the
right to withdraw or to be repaid any capital contributed by such Partner
except as otherwise specifically provided in this Agreement.
ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS
SECTION 4.1. Allocations of Profits and Losses.
(a) Except as otherwise provided in Section 4.1(b) through (d),
each Partner shall share Partnership profits and losses and all related items
of income, gain, loss, deduction and credit allocated, charged or credited to
the Partners in accordance with the Sharing Ratio of such Partner.
(b) All Partnership items of income and gain arising from the
Annual Fee shall be allocated 100% to the General Partner.
(c) Notwithstanding any of the foregoing provisions of this
Section 4.1 to the contrary:
(i) If during any fiscal year of the Partnership there is a
net increase in Minimum Gain attributable to a Partner Nonrecourse
Debt that gives rise to Partner Nonrecourse Deductions, each Partner
bearing the economic risk of loss for such Partner Nonrecourse
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Debt shall be allocated items of Partnership deductions and losses for
such year (consisting first of cost recovery or depreciation
deductions with respect to property that is subject to such Partner
Nonrecourse Debt and then, if necessary, a pro rata portion of the
Partnership's other items of deductions and losses, with any remainder
being treated as an increase in Minimum Gain attributable to Partner
Nonrecourse Debt in the subsequent year) equal to such Partner's share
of Partner Nonrecourse Deductions, as determined in accordance with
applicable Treasury regulations.
(ii) If for any fiscal year of the Partnership there is a net
decrease in Minimum Gain attributable to Partnership Nonrecourse
Liabilities, each Partner shall be allocated items of Partnership
income and gain for such year (consisting first of gain recognized
from the disposition of Partnership property subject to one or more
Partnership Nonrecourse Liabilities and then, if necessary, for
subsequent years) equal to such Partner's share of such net decrease
(except to the extent such Partner's share of such net decrease is
caused by a change in debt structure with such Partner commencing to
bear the economic risk of loss as to all or part of any Partnership
Nonrecourse Liability or by such Partner contributing capital to the
Partnership that the Partnership uses to repay a Partnership
Nonrecourse Liability), as determined in accordance with applicable
Treasury regulations.
(iii) If for any fiscal year of the Partnership there is a
net decrease in Minimum Gain attributable to a Partner Nonrecourse
Debt, each Partner shall be allocated items of Partnership income and
gain for such year (consisting first of gain recognized from the
disposition of Partnership property subject to Partner Nonrecourse
Debt, and then if necessary, a pro rata portion of the Partnership's
other items of income and gain, and if necessary, for subsequent
years) equal to such Partner's share of such net decrease (except to
the extent such Partner's share of such net decrease is caused by a
change in debt structure or by the Partnership's use of capital
contributed by such Partner to repay the Partner's Nonrecourse Debt)
as determined in accordance with applicable Treasury regulations.
(d) If for any fiscal year of the Partnership the allocation of
any loss or deduction (net of any income or gain) to any Partner would cause or
increase a negative balance in such Partner's Adjusted Capital Account as of
the end of such fiscal year (a "Deficit Partner") after taking into account the
provisions of subsection (c) of this Section 4.1, only the amount of such loss
or deduction that reduces the balance to zero shall be allocated to such
Deficit Partner and the remaining loss or deduction shall be allocated to the
Partners whose Adjusted Capital Accounts have a positive balance remaining at
such time (the "Positive Partners") in proportion to such positive balances.
After any such allocation, any Partnership income or gain that would otherwise
be allocated to the Deficit Partner shall be allocated instead to the Positive
Partners up to an amount equal to the Partnership loss or deduction allocated
to the Positive Partners under the preceding sentence; provided, however, that
no allocation of income or gain shall be made under this sentence if the effect
of such allocation would be to cause the Adjusted Capital Account of a Deficit
Partner to be less than zero. If, after taking into account the allocation in
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the first sentence of this Section 4.1(d), the Adjusted Capital Account balance
of a Deficit Partner remains less than zero at the end of a fiscal year, a pro
rata portion of each item of Partnership income or gain otherwise allocable to
the Positive Partners for such fiscal year (or if there is no such income or
gain allocable to the Positive Partners for such fiscal year, all such income
or gain so allocable in the succeeding fiscal year or years) shall be allocated
to the Deficit Partner in an amount necessary to cause its Adjusted Capital
Account balance to equal zero; provided that no allocation under this sentence
shall have the effect of causing any Positive Partner's Adjusted Capital
Account to be less than zero. After any such allocation, any Partnership gain
resulting from the sale or other disposition of Partnership property that would
otherwise be allocated to a Deficit Partner for any fiscal year under this
Section 4.1 shall be allocated instead to the Positive Partners until the
amount of gain so allocated equals the amount of gain previously allocated to
such Deficit Partner under the preceding sentence of this Section 4.1(d);
provided, however, that no allocation of gain shall be made under this sentence
if the effect of such allocation would be to cause the Adjusted Capital Account
of a Deficit Partner to be less than zero.
SECTION 4.2. Distributions. The General Partner shall distribute to
the Partners all cash funds of the Partnership (other than Capital
Contributions) which the General Partner reasonably determines in its sole
discretion are not needed for the payment of existing or foreseeable
Partnership obligations and expenditures; provided that the General Partner
shall endeavor to make distributions of cash (in the event that the Partnership
has available cash) to the Partners prior to April 15 of each year in such
amounts as are sufficient to satisfy each Partner's projected deemed income tax
liability with respect to such Partner's ownership interest in the Partnership
(calculated based upon the highest marginal federal income tax rate and the
highest state and/or local income tax rates applicable to any Partner, in each
case utilizing the respective rates for individuals relative to ordinary income
or capital gains, depending on the characterization of the Partnership's
income, as such rates are in effect at such time). In addition, the General
Partner may make distributions of Securities owned by the Partnership to the
Partners at such times and in such amounts as the General Partner, in its sole
discretion, determines to be appropriate. All distributions made pursuant to
this Section 4.2 (whether in cash or in-kind), shall be made in accordance with
the allocations set forth in Section 4.1(a) or Section 4.1(b), depending upon
the source of such distributions; provided, however, that all tax distributions
shall be made in accordance with the allocations set forth in Section 4.1(a).
Notwithstanding the preceding provisions of this Section 4.2, any in-kind
distribution of all or substantially all of the Securities then owned by the
Partnership may only be conducted in accordance with Article VIII of this
Agreement.
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ARTICLE V
MANAGEMENT
SECTION 5.1. Power and Authority of General Partner.
(a) The General Partner shall conduct, direct and exercise full
control over all activities of the Partnership. Except as otherwise expressly
provided in this Agreement, all management powers over the business and affairs
of the Partnership shall be exclusively vested in the General Partner, and the
Limited Partners shall have no right of control over the business and affairs
of the Partnership. In addition to the powers now or hereafter granted a
general partner of a limited partnership under the Act or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner shall have full power and authority to do all things deemed necessary
or desirable by it to conduct the business of the Partnership in the name of
the Partnership, including, without limitation, (i) entering into the Stock
Purchase Agreement and/or any amendments thereof with MESA; (ii) entering into
any agreement in the name and on behalf of the Partnership pursuant to which
the Partnership will acquire the Preferred Stock and/or other Securities of
MESA; (iii) the making of any expenditures and the incurring of any obligations
it deems necessary or advisable for the conduct of the business activities of
the Partnership; (iv) the disposition, mortgage, pledge, encumbrance,
hypothecation, or exchange of any or all of the Securities of the Partnership,
provided, however, that the General Partner shall not cause the Partnership to
incur any indebtedness that would aggregate in excess of 15% of the Fair Market
Value of the Partnership's Securities (calculated at the time the Partnership
incurs such indebtedness) unless the General Partner shall have received the
prior consent of a Super Majority Interest of the Limited Partners; (v) the
exercise of all rights, powers, privileges and other incidents of ownership or
possession with respect to Securities held or owned by the Partnership,
including but not limited to the exercise of all voting rights with respect to
such Securities; (vi) the conversion of the Preferred Stock (including the
decision whether to convert and the timing of any such conversion) into Common
Stock; (vii) the negotiation and execution on terms deemed desirable to the
Partnership in its sole discretion and the performance of any contracts or
other instruments that it considers useful or necessary to the conduct of
Partnership business activities or the implementation of its powers under this
Agreement; (viii) the distribution of Partnership cash or Securities
(consistent with Section 4.2 or Article VIII, as applicable); (ix) the
selection and dismissal of employees and outside attorneys, accountants,
consultants and contractors and the determination of their compensation and
other terms of employment or hiring; (x) the appointing of attorneys-in-fact
and officers who will act on behalf of the Partnership; (xi) the admission of
substituted or additional Limited Partners upon such terms and subject to such
conditions as the General Partner shall determine in its sole discretion; (xii)
the provision of continuing analysis and consulting assistance to MESA during
such time as the Minimum Ownership Condition is satisfied; and (xiii) the
control of any matters affecting the rights and obligations of the Partnership,
including the conduct of any litigation and the incurring of legal expenses and
the settlement of claims and litigation.
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<PAGE> 20
(b) Each Limited Partner hereby consents and agrees that the
General Partner is authorized to execute, deliver and perform the agreements,
acts, transactions and matters described in this Agreement on behalf of the
Partnership without any further act, approval or vote of the Partners or the
Partnership (unless any other provision of this Agreement provides otherwise),
including without limitation, the execution of the Stock Purchase Agreement,
the closing of the transactions contemplated by the Stock Purchase Agreement,
the acquisition of Securities, the conversion of any such Securities, the sale
or other disposition of Partnership property and despite the fact that the
specific terms and conditions of any such conversion, sale or disposition are
not presently known by such Partner. The participation by the General Partner
in any agreement or action authorized or permitted under this Agreement shall
not constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners under this Agreement or
under applicable law.
(c) In accomplishing all of the foregoing and in fulfilling its
obligations pursuant to this Agreement, the General Partner may, in its sole
discretion, retain or use any affiliate's personnel, properties and equipment
or the General Partner may hire or rent those of third parties and may employ
on a temporary or continuing basis outside accountants, attorneys, consultants
and others on such terms as the General Partner deems advisable. No person,
firm or corporation dealing with the Partnership shall be required to inquire
into the authority of the General Partner to take any action or make any
decision.
SECTION 5.2. Duties and Services of the General Partner. The General
Partner shall comply in all respects with the terms of this Agreement. In the
conduct of the business and operations of the Partnership, the General Partner
shall (a) use its reasonable good faith efforts to cause the Partnership (i) to
comply with the terms and provisions of all agreements to which the Partnership
is a party or to which its properties are subject, (ii) to comply with all
applicable laws, ordinances or governmental rules and regulations to which the
Partnership is subject and (iii) to obtain and maintain all licenses, permits,
franchises and other governmental authorizations necessary with respect to the
ownership of Partnership properties and the conduct of the Partnership's
business and operations and (b) attend to other day-to-day affairs of the
Partnership in a manner which is in the best interests of the Partnership.
During the existence of the Partnership, the General Partner shall devote such
time and effort to the Partnership's business as may be necessary to promote
adequately the interests of the Partnership and the mutual interests of the
Partners; however, it is specifically understood and agreed that the General
Partner shall not be required to devote full time to the Partnership's
business, and it is understood that the General Partner currently engages in
other business ventures and possesses interests in other business ventures, and
it is agreed that the General Partner may continue to engage in other business
ventures and possess interests in other business ventures, of any and every
type and description, independently or with others, including, without
limitation, the ownership, of Securities, and neither the Partnership, nor any
other Partner shall by virtue of this Agreement have any right, title or
interest in or to such present or future independent ventures. The General
Partner shall be obligated to perform the duties, responsibilities and
obligations of the General Partner hereunder only to the extent that funds of
the Partnership are available therefor.
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SECTION 5.3. Liability of Partners and Indemnification.
(a) The General Partner, the Limited Partners and their
affiliates, and their partners, officers, directors, employees and agents,
shall not be liable, responsible or accountable in damages or otherwise to the
Partnership or the other Partners for any acts or omissions that do not
constitute gross negligence, willful misconduct or breach of fiduciary duty and
the Partnership shall indemnify to the maximum extent permitted under the Act
and save harmless the General Partner and the Partners and their partners,
officers, directors, employees and agents (individually, "Indemnitee") from all
liabilities for which indemnification is permitted under the Act. Any act or
omission performed or omitted by an Indemnitee on advice of independent legal
counsel or a qualified and experienced independent consultant who has been
employed or retained by the Partnership shall be presumed to have been
performed or omitted in good faith without gross negligence, willful misconduct
or breach of fiduciary duty. THE PARTIES RECOGNIZE THAT THIS PROVISION SHALL
RELIEVE ANY SUCH INDEMNITEE FROM ANY AND ALL LIABILITIES, AND PERMIT
INDEMNIFICATION OF ANY SUCH INDEMNITEE WITH RESPECT TO ANY SUCH LIABILITIES,
ARISING OR TO ARISE OUT OF ANY SUCH NEGLIGENCE BY ANY SUCH INDEMNITEE, AND SUCH
INDEMNITEE SHALL BE ENTITLED TO INDEMNIFICATION FROM ACTS OR OMISSIONS THAT MAY
GIVE RISE TO SUCH NEGLIGENCE.
(b) The Partnership shall, to the maximum extent permitted under
the Act, pay or reimburse expenses incurred by an Indemnitee in connection with
the Indemnitee's appearance as a witness or other participation in a proceeding
involving or affecting the Partnership at a time when the Indemnitee is not a
named defendant or respondent in the proceeding.
(c) The General Partner shall have the right to require that any
contract entered into by the Partnership provide that the General Partner shall
have no personal liability for the obligations of the Partnership thereunder.
(d) The indemnification provided by this Section 5.3 shall be in
addition to any other rights to which each Indemnitee may be entitled under any
agreement or vote of the Partners, as a matter of law or otherwise, both as to
action in the Indemnitee's capacity as a Partner or an officer, director,
employee or agent of a Partner or as a person serving at the request of the
Partnership as set forth above and to action in another capacity, and shall
continue as to an Indemnitee who has ceased to serve in such capacity and shall
inure to the benefit of the heirs, successors, assigns, administrators and
personal representatives of the Indemnitees.
(e) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of this indemnification provision.
(f) An Indemnitee shall not be denied indemnification in whole or
in part under this Section 5.3 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
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SECTION 5.4. Contracts with Affiliates. The Partnership may enter
into contracts and agreements with the General Partner and any of its
affiliates for the rendering of services and the sale and lease of supplies and
equipment on such arms-length terms that are no less favorable to the
Partnership than those available from unrelated third parties.
SECTION 5.5. Reimbursement of General Partner; Success Fee.
(a) The Partnership shall pay or reimburse to the General Partner,
as a Partnership expense, all reasonable direct and indirect costs and expenses
incurred by the General Partner in organizing the Partnership and in managing
and conducting the business and affairs of the Partnership, including without
limitation, (i) all costs and expenses incurred in any business of the
Partnership, (ii) secretarial, telephone, office rent and other office
expenses, (iii) salaries and other compensation expenses of employees, officers
and directors, (iv) other administrative expenses, (v) travel expenses, (vi)
legal and accounting costs and expenses and (vii) expenses incurred in
providing or obtaining such other professional, technical, administrative
services and advice as the General Partner may deem necessary or desirable. The
General Partner may utilize the services of any of its affiliates in the course
of conducting the business and affairs of the Partnership, and the Partnership
may pay, and any such entity shall be entitled to receive, a reasonable fee for
any services conducted at the request of the General Partner for the
Partnership. The General Partner shall determine which expenses are allocable
to the Partnership in a manner which is fair and reasonable to the General
Partner and the Partnership, and if such allocation is made by the General
Partner in good faith it shall be conclusive in the absence of manifest error.
Notwithstanding the reimbursement of costs and expenses described in the
immediately preceding sentences of this Section 5.5(a), in the event that the
Partnership shall separately receive reimbursement for any such costs and
expenses incurred by the General Partner from MESA pursuant to the Stock
Purchase Agreement, the General Partner shall not receive a duplicate
reimbursement of such amounts payable by MESA from the Partnership. In
addition, the General Partner shall not be entitled to receive reimbursement
from the Partnership during any calendar year until such time as the amounts of
such costs and expenses exceeds the Annual Fee to be paid to the Partnership
for such year, and the General Partner shall be entitled to receive
reimbursement for its costs and expenses only to the extent of such excess.
(b) The General Partner may cause the Partnership to pay any
person (including, without limitation, any Partner or affiliate of the General
Partner) a fee (herein called the "Success Fee") for services rendered to the
Partnership if the payment of the Success Fee is approved in writing by a Super
Majority Interest of the Limited Partners. The Success Fee shall be payable at
the time distributions are made to the Partners in accordance with Section 4.2
or Section 8.3 of this Agreement and shall not exceed an amount equal to the
difference between (a) minus (b) below, where (a) is two percent (2%) of (i)
the Fair Market Value of Securities and any cash or cash equivalents of the
Partnership at such time, plus (ii) the cumulative amount of the aggregate
distributions made to the Partners pursuant to Section 4.2 (other than
distributions made to the General Partner of the Annual Fee specially allocated
to the General Partner pursuant to Section 4.1(c)) or Section 8.3 from
inception to such date, minus (iii) the
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aggregate Capital Contributions of the Partners, and (b) is the amount of the
Success Fee, if any, previously paid by the Partnership.
SECTION 5.6. Insurance. The General Partner shall acquire and
maintain for the Partnership at its expense insurance covering such risks and
in such amounts as the General Partner shall from time to time determine to be
necessary or appropriate.
SECTION 5.7. Tax Elections. The General Partner shall make such tax
elections on behalf of the Partnership as it shall deem appropriate in its sole
discretion.
SECTION 5.8. Tax Returns. The General Partner shall prepare or cause
to be prepared and timely file all federal, state and local income and other
tax returns and reports as may be required as a result of the business of the
Partnership.
SECTION 5.9. Tax Matters Partner. The General Partner shall be
designated the tax matters partner under Section 6231 of the Internal Revenue
Code. The General Partner is authorized to take such actions and to execute and
file all statements and forms on behalf of the Partnership which may be
permitted or required by the applicable provisions of the Internal Revenue Code
or Treasury regulations issued thereunder. The General Partner shall have full
and exclusive power and authority on behalf of the Partnership to represent the
Partnership (at the Partnership's expense) in connection with all examinations
of the Partnership's affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. Such power and authority
shall include, without limitation, the power and authority to extend the
statute of limitations, file a request for administrative adjustment, file suit
concerning any Partnership tax matter, and to enter into a settlement agreement
relating to any Partnership tax matter.
SECTION 5.10. Withdrawal by the General Partner. The General Partner
may voluntarily withdraw from the Partnership upon seventy five (75) days
written notice to the Partners. Such notice requirement may be shortened or
waived by a Super Majority Interest of the Limited Partners, in their sole
discretion. Upon the withdrawal of the General Partner, the General Partner
shall not be deemed to be liable with respect to any debts or liabilities that
the Partnership incurs subsequent to the date of withdrawal, provided that such
withdrawal shall not diminish or in any way affect any liabilities that the
Partnership incurred prior to such date.
SECTION 5.11. Certain Decisions. (a) Unless otherwise expressly
provided in this Agreement (i) whenever a conflict of interest exists or arises
between the General Partner, on the one hand, and the Partnership or the
Limited Partners, on the other hand, or (ii) whenever this Agreement provides
that the General Partner shall act in a manner which is fair and reasonable to
the Partnership or the Limited Partners, the General Partner shall resolve such
conflict of interest or take such action considering, in each case, the
relative interests of each party to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any
customary or accepted industry practices, and any applicable generally accepted
accounting practices or principles, and in the absence of bad faith by the
General
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Partner, the resolution, action so made, taken or provided by the General
Partner shall not constitute a breach of this Agreement or a breach of any
standard of care or duty imposed herein or under the Act or any other
applicable law, rule or regulation. Unless otherwise expressly provided in this
Agreement, any provision contained herein shall control to the fullest extent
possible if it is in conflict with such standard of care or duty, the Act or
any other applicable law, rule or regulation; and each Partner hereby waives
such standard of care or duty under the Act and such applicable law, rule or
regulation and agrees that the same shall be modified and/or waived to the
extent necessary to permit the General Partner to act as described above and to
give effect to the foregoing provisions of this Section 5.11.
(b) Whenever in this Agreement the General Partner is permitted or
required to make a decision (i) in its "sole discretion" or under a grant of
similar authority or latitude, the General Partner shall be entitled to
consider only such interests and factors as it desires or (ii) in "good faith"
or under another express standard, the General Partner shall act under such
express standard and shall not be subject to any other or different standards
imposed by this Agreement or under the Act or any other applicable law, rule or
regulation.
(c) No transaction between the General Partner, on the one hand,
and the Partnership or the Limited Partners, on the other hand, or any actions
taken by the General Partner with respect to the Partnership, will be void or
voidable solely for this reason and/or under the Act or any other applicable
law, rule or regulation, and no person having an interest in any such
transaction shall have any liability to the Partnership or any Partner solely
by virtue of such relationship or conflict, if the material facts as to the
relationship and transaction are disclosed or are known to the Limited Partners
and the transaction is approved by a Super Majority Interest of the Limited
Partners; provided, however, that this Section 5.11(c) shall not create any
duty or obligation upon the General Partner to seek or obtain any such approval
in the event of compliance with the provisions contained in Section 5.4 hereof.
ARTICLE VI
RIGHTS OF LIMITED PARTNERS
SECTION 6.1. Rights of Limited Partners. The Limited Partners shall
have the right to: (a) have the Partnership books and records (including,
without limitation, those required under the Act) kept at the principal United
States office of the Partnership and at all reasonable times to inspect and
copy any of them at the sole expense of such Partner; (b) have on demand true
and full information of all things affecting the Partnership and a formal
account of Partnership affairs whenever circumstances render it just and
reasonable; (c) have dissolution and winding up by decree of court as provided
for in the Act; and (d) exercise all rights of a limited partner under the Act
(except to the extent otherwise specifically provided herein). Notwithstanding
the foregoing, the Limited Partners shall not have the right to receive data
pertaining to the properties of the Partnership if the General Partner is
subject to a valid agreement prohibiting
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the distribution of such data or if the General Partner shall otherwise
determine that such data is confidential.
SECTION 6.2. Limitations on Limited Partners. The Limited Partners
shall not: (a) be permitted to take part in the business or control of the
business or affairs of the Partnership; (b) have any voice in the management or
operation of any Partnership property; or (c) have the authority or power to
act as agent for or on behalf of the Partnership or any other Partner, to do
any act which would be binding on the Partnership or any other Partner, or to
incur any expenditures on behalf of or with respect to the Partnership. No
Partner shall hold out or represent to any third party that the Limited
Partners have any such power or right or that the Limited Partners are anything
other than "limited partners" in the Partnership.
SECTION 6.3. Liability of Limited Partners. The Limited Partners
shall not be liable for the debts, liabilities, contracts or other obligations
of the Partnership except for any unpaid Capital Contributions agreed to be
made by a Partner, except to the extent of the Limited Partners' share of the
assets (including undistributed revenues) of the Partnership and except as
otherwise provided in the Act.
SECTION 6.4. Withdrawal and Return of Capital Contributions. No
Limited Partner shall be entitled to (a) withdraw from the Partnership except
upon the assignment by such Limited Partner of all of his or her interest in
the Partnership in accordance with Section 9.1, or (b) the return of his or her
Capital Contributions except to the extent that distributions, if any, made
pursuant to the express terms of this Agreement may be considered as such by
law or upon dissolution and liquidation of the Partnership, and then only to
the extent expressly provided for in this Agreement and as permitted by law.
ARTICLE VII
BOOKS, REPORTS AND MEETINGS
SECTION 7.1. Capital Accounts, Books and Records.
(a) The General Partner shall keep books of account for the
Partnership in accordance with the terms of this Agreement. Such books shall
be maintained at the principal office of the Partnership.
(b) An individual capital account shall be maintained by the
Partnership for each Partner as provided below:
(i) Each Partner's Capital Contributions when made shall
be credited to such Partner's capital account. The capital account of
each Partner shall, except as otherwise provided herein, be (A)
credited with the amount of cash contributed to the Partnership by
such Partner; (B) credited with the fair market value of any property
contributed to
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the Partnership by such Partner (net of liabilities secured by such
contributed property that the Partnership is considered to assume or
take subject to under Section 752 of the Internal Revenue Code); (C)
credited with the amount of any item of taxable income or gain and the
amount of any item of income or gain exempt from tax allocated to such
Partner for federal income tax purposes; (D) debited by the amount of
any item of deduction or loss allocated to such Partner; (E) debited
by such Partner's allocable share of expenditures of the Partnership
not deductible in computing the Partnership's taxable income and not
properly chargeable as capital expenditures, including any
nondeductible book amortizations of capitalized costs; and (F) debited
by the amount of cash or the Fair Market Value of any property
distributed to such Partner (net of liabilities secured by such
distributed property that such Partner is considered to assume or take
subject to under Section 752 of the Internal Revenue Code).
Immediately prior to any distribution of property by the Partnership
that is not pursuant to a liquidation of the Partnership, the
Partners' capital accounts shall be adjusted by assuming that the
distributed assets were sold by the Partnership for cash at their
respective Fair Market Values (as determined by the General Partner)
as of the date of distribution by the Partnership, and crediting or
debiting each Partner's capital account with its respective share of
the hypothetical gains or losses resulting from such assumed sales in
the same manner as gains or losses on actual sales of such properties
would be credited or debited to such Partner's capital account.
(ii) Any adjustments of basis of Partnership property
provided for under Sections 734 and 743 of the Internal Revenue Code
and comparable provisions of state law (resulting from an election
under Section 754 of the Internal Revenue Code or comparable
provisions of state law) shall not affect the capital accounts of the
Partners except to the extent required by Treasury Regulation Section
1.704-1(b)(2)(iv)(m), and the Partners' capital accounts shall be
debited or credited pursuant to the terms of this Section 7.1 as if no
such election had been made.
(iii) Capital accounts shall be adjusted, in a manner
consistent with this Section 7.1, to reflect any adjustments in items
of Partnership income, gain, loss or deduction that result from
amended returns filed by the Partnership or pursuant to an agreement
by the Partnership with the Internal Revenue Service or a final court
decision.
(iv) In the case of property contributed to the
Partnership by a Partner, the Partners' capital accounts shall be
debited and credited for items of depreciation, cost recovery,
amortization and gain or loss with respect to such property computed
in the same manner as such items would be computed if the adjusted tax
basis of such property were equal to its fair market value on the date
of its contribution to the Partnership, in lieu of the capital account
adjustments provided above for such items, all in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv)(g).
(v) It is the intention of the Partners that the capital
accounts of each Partner be kept in the manner required under Treasury
Regulation Section 1.704-1(b)(2)(iv). To
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the extent any additional adjustment to the capital accounts is
required by such regulation, the General Partner is hereby authorized
to make such adjustment after notice to the Limited Partners.
SECTION 7.2. Bank Accounts. The General Partner shall cause one or
more accounts to be maintained in a bank (or banks) or one or more financial
institutions, which accounts shall be used in connection with the business of
the Partnership, and in which shall be deposited any and all receipts of the
Partnership. The General Partner shall determine the number of and the persons
who will be authorized as signatories on each such bank account. The General
Partner may invest the Partnership funds in money market accounts or other
similar accounts with such banks or financial institutions as the General
Partner shall determine to be necessary or appropriate.
SECTION 7.3. Reports. The Partnership shall deliver to the Partners
(i) annually, within 120 days after the end of each fiscal year of the
Partnership, unaudited financial statements as of the end of and for such
fiscal year (which shall set forth the profits and losses of the Partnership,
the balance of such Partner's capital account and the status of Payout), and
(ii) such other reports and financial statements as are provided to the
Partnership by MESA as the General Partner shall determine from time to time.
SECTION 7.4. General Information. The General Partner shall keep the
Partners informed generally of its transactions on behalf of the Partnership
and shall furnish to the Partners from time to time information regarding the
activities and business of the Partnership. The General Partner at its election
may separately inform and consult with the Limited Partners for the above
purposes without the necessity of calling and/or holding a meeting of the
Limited Partners. Notwithstanding the foregoing provisions of this Section 7.4,
the Limited Partners shall not be permitted to take part in the business or
control of the business of the Partnership; it being the intention of the
parties that the General Partner shall have full and exclusive power and
authority on behalf of the Partnership to acquire, manage, control and
administer the assets, business and affairs of the Partnership in accordance
with Section 5.1 of this Agreement and the other applicable provisions of this
Agreement.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION
SECTION 8.1. Dissolution. The Partnership shall be dissolved upon
the occurrence of any of the following:
(a) December 31, 2008.
(b) The sale, disposition or termination of all or substantially
all of the property then owned by the Partnership.
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(c) An event of withdrawal from the Partnership by the General
Partner as provided for in the Act.
(d) The determination of the General Partner in its sole
discretion at any time subsequent to January 1, 1997.
(e) At any time from the date of this Agreement to and including
June 30, 2001, the consent of the General Partner and a Super Majority Interest
of the Limited Partners, and at any time from and after July 1, 2001, the
consent of the General Partner and a Majority Interest of the Limited Partners.
(f) In the event that the Minimum Ownership Condition is no longer
satisfied.
(g) In the event both of the following shall occur: (i) the death
of Richard E. Rainwater or the inability or refusal of Richard E. Rainwater to
perform his duties to the General Partner on a full time basis for 180
consecutive days as a result of his physical or mental incapacity and (ii)
Darla D. Moore and Kenneth A. Hersh no longer constitute a majority of the
Board of Directors of the General Partner.
(h) Any event which, under the Act, causes the dissolution of a
limited partnership.
SECTION 8.2. Reconstitution. Upon the dissolution of the Partnership
as a result of an event described in Section 8.1(c) or, to the extent permitted
under the Act, Section 8.1(h), a Super Majority Interest of the Limited
Partners acting at a duly held meeting or by means of a written consent, within
ninety (90) days following the receipt of notice of the occurrence of such
event from the General Partner, shall be entitled to reconstitute the
Partnership and continue its business and to elect and substitute a new
successor General Partner. Upon the election and substitution of a new
successor General Partner, the Partnership interest of the prior General
Partner shall be converted hereunder to an interest of a Limited Partner and as
such shall have all the rights and obligations associated therewith. Upon any
such election by the required Limited Partners, all Partners shall be bound
thereby and shall be deemed to have approved the elections to reconstitute the
Partnership and continue its business and to substitute a new successor General
Partner, and the successor General Partner shall be permitted to use the power
of attorney provided for in Section 10.2 to evidence the deemed approval of
such elections by each Limited Partner notwithstanding any previous abstention
or negative vote with respect to such elections by such Limited Partner.
SECTION 8.3. Liquidation and Termination. Upon dissolution of the
Partnership, unless reconstituted under Section 8.2, the General Partner or, if
the withdrawal of the General Partner caused the dissolution of the
Partnership, a person selected by a Super Majority Interest of the Limited
Partners, shall act as liquidator or shall appoint one or more liquidators who
shall have full authority to wind up the affairs of the Partnership and make
final distribution as provided herein. The liquidator shall continue to operate
the Partnership properties with all of the power and authority of the General
Partner (including without limitation the power to sell all or
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substantially all of the assets of the Partnership as provided in Section 5.1).
The steps to be accomplished by the liquidator are as follows:
(a) As promptly as possible after dissolution and again after
final liquidation, the liquidator, if requested by any Partner, shall cause a
proper accounting to be made by the Partnership's independent accountants of
the Partnership's assets, liabilities and operations through the last day of
the month in which the dissolution occurs or the final liquidation is
completed, as appropriate.
(b) The liquidator shall pay all of the debts and liabilities of
the Partnership (including all expenses incurred in liquidation) or otherwise
make adequate provision therefor (including without limitation the
establishment of a cash escrow fund for contingent liabilities in such amount
and for such term as the liquidator may reasonably determine or the payment of
the Success Fee in the event the Success Fee is approved pursuant to Section
5.5(b)). After making payment or provision for all debts and liabilities of the
Partnership, the Partners' capital accounts shall then be adjusted by (i)
assuming the sale of all remaining assets of the Partnership for cash at their
respective Fair Market Values as of the date of termination of the Partnership
and assuming the distribution of such cash at such times for the purpose of
computing Payout, and (ii) debiting or crediting each Partner's capital account
with its respective share of the hypothetical gains or losses resulting from
such assumed sales in the same manner as each such capital account would be
debited or credited with gains or losses on actual sales of such assets. The
liquidator shall then by payment of cash or property (valued as of the date of
termination of the Partnership at its Fair Market Value) distribute to the
Partners such amounts as are required to pay the positive balances of their
respective capital accounts. Such a distribution shall be in cash or in kind as
determined by the liquidator, provided that in the event of a distribution in
kind of the Securities of the Partnership, the liquidator shall assign to the
Partners the respective rights and benefits that may exist under any contracts
of the Partnership that may be of value to any of the Partners. Any
distribution to the Partners in liquidation of the Partnership shall be made by
the later of either the end of the taxable year in which the liquidation occurs
or 90 days after the date of such liquidation. For purposes of the preceding
sentence, the term "liquidation" shall have the same meaning as set forth in
Treasury Regulation Section 1.704-1(b)(2)(ii) as in effect at such time. Each
Partner shall have the right to designate another person to receive any
property which otherwise would be distributed in kind to that Partner pursuant
to this Section 8.3.
(c) Except as expressly provided herein, the liquidator shall
comply with any applicable requirements of the Act and all other applicable
laws pertaining to the winding up of the affairs of the Partnership and the
final distribution of its assets.
(d) Notwithstanding any provision in this Agreement to the
contrary, no Partner shall be obligated to restore a deficit balance in its
capital account at any time.
The distribution of all Partnership cash and/or property to the
Partners in accordance with the provisions of this Section 8.3 shall constitute
a complete return to the Partners of their
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Capital Contributions and a complete distribution to the Partners of their
interest in the Partnership and all Partnership property.
ARTICLE IX
ASSIGNMENTS OF INTERESTS
SECTION 9.1. Assignment by Partners.
(a) No Partner's interest in the Partnership shall be assigned,
mortgaged, pledged, subjected to a security interest or otherwise encumbered,
as a whole or in part, unless (i) such Partner makes an assignment pursuant to
a Permitted Transfer, (ii) if such assigning Partner is the General Partner or
Richard E. Rainwater, such Partner obtains the prior written consent of a Super
Majority Interest of the Limited Partners, or (iii) if such assigning Partner
is a Limited Partner other than Richard E. Rainwater, such Partner obtains the
prior written consent of the General Partner, and any attempt by a Partner to
assign its interest other than pursuant to a Permitted Transfer or obtaining
the requisite consent required pursuant to subsection (ii) or (iii), as
applicable, shall be void ab initio.
(b) Except in any instance in which Richard E. Rainwater shall
make a Permitted Transfer or in any instance in which Richard E. Rainwater
assigns a Partnership interest consisting of a Sharing Ratio of less than two
percent in one transaction or in a series of transactions, Richard E. Rainwater
hereby covenants and agrees with the other Partners that after December 31,
1996, he will not make an assignment of his interest in the Partnership unless
he and the General Partner shall allow each other Limited Partner the right to
assign up to the same proportion of such Limited Partner's interest upon the
same terms and conditions. In the event that Richard E. Rainwater desires to
make any such assignment other than pursuant to a Permitted Transfer, he shall
provide each Limited Partner with notice of the terms of such assignment,
including the identity of the assignee, the Partnership interest that he
desires to assign, and the consideration for such assignment. Within ten days
after each Limited Partner's receipt of such notice, each Limited Partner shall
notify Richard E. Rainwater in writing of its election to assign such portion
of its Partnership interest. If any Limited Partner makes such election, such
Limited Partner shall assign its pro rata portion of its interest in the
Partnership on the same terms and conditions described in the original notice
provided by Richard E. Rainwater. If Richard E. Rainwater does not receive any
Limited Partner's notice of such election within the above-described time
period, or, if any Limited Partner notifies Richard E. Rainwater in writing
that such Limited Partner will not make such election to participate in such
assignment, Richard E. Rainwater shall have the right to make such assignment
on the terms specified in his original notice to the Limited Partners without
any obligation to offer to such Limited Partner the right to participate in
such assignment on a pro rata basis.
(c) Unless an assignee becomes a substituted Partner in accordance
with the provisions set forth below, such assignee shall not be entitled to any
of the rights granted to a
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Partner hereunder, other than the right to receive allocations of income, gain,
loss, deduction, credit and similar items and distributions to which the
assignor would otherwise be entitled, to the extent such items are assigned.
(d) An assignee of the interest of a Partner, or any portion
thereof, shall become a substituted Partner entitled to all of the rights of a
Partner if, and only if (i) the assignor gives the assignee such right, (ii) if
such assigning Partner is the General Partner or Richard E. Rainwater, a Super
Majority Interest of the Limited Partners consent to such substitution, the
granting or denying of which shall be in each such Partner's sole discretion,
or if such assigning Partner is a Limited Partner other than Richard E.
Rainwater, the General Partner consents to such substitution, the granting or
denying of which shall be in the General Partner's sole discretion, and (iii)
the assignee executes and delivers such instruments, in form and substance
satisfactory to the General Partner (if the assignee is the assignee of a
Limited Partner other than Richard E. Rainwater) or a Super Majority Interest
of the Limited Partners (if the assignee is the assignee of the General Partner
or Richard E. Rainwater), as the General Partner or a Super Majority Interest
of the Limited Partners, as applicable, may deem necessary or desirable to
effect such substitution and to confirm the agreement of the assignee to be
bound by all of the terms and provisions of this Agreement. Without limitation
of the foregoing, each person that acquires all or any portion of the
Partnership interest of Richard E. Rainwater pursuant to a Permitted Transfer
shall also be required to confirm such person's covenant to provide each other
Limited Partner the right to participate in any future transfer of such
Partnership interest pursuant to Section 9.1(b) hereof. Upon the satisfaction
of such requirements, the General Partner shall concurrently (or as of such
later date as shall be provided for in any applicable written instruments
furnished to the General Partner) admit any such assignee as a substituted
Partner of the Partnership and reflect such admission and the date thereof in
the records of the Partnership. Without limitation of the foregoing, the
General Partner is hereby authorized, without the joinder of any other Partner,
to do all things and execute all documents for and on behalf of the Partnership
to effect the admission of any substituted or additional Limited Partner,
including the amendment of Exhibit A in order to reflect such admission.
(e) The Partnership and the General Partner shall be entitled to
treat the record owner of any Partnership interest as the absolute owner
thereof in all respects and shall incur no liability for distributions of cash
or other property made in good faith to such owner until such time as a written
assignment of such interest that complies with the terms of this Agreement has
been received by the General Partner.
ARTICLE X
REPRESENTATIONS AND WARRANTIES; POWER OF ATTORNEY
SECTION 10.1. Representations and Warranties. Each Partner
acknowledges and agrees that its interest in the Partnership (the "Partnership
Interest") is being purchased for such Partner's own account as part of a
private offering, exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act") and all applicable state securities or blue sky
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laws, for investment only and not with a view to the distribution nor other
sale thereof and that an exemption from registration under the Securities Act
or any applicable state securities laws under the Securities Act or any
applicable state securities laws may not be available if the Partnership
Interest is acquired by such Partner with a view to resale or distribution
thereof under any conditions or circumstances as would constitute a
distribution of such Partnership Interest within the meaning and purview of the
Securities Act or the applicable state securities laws. In addition, each
Partner represents and warrants to the General Partner, the Partnership and all
other interested parties that:
(a) Such Partner has been furnished with all information that it
has requested for the purpose of evaluating the proposed acquisition of its
Partnership Interest, including all information relative to MESA and the
Preferred Stock, and such Partner has had an opportunity to ask questions of
and receive answers regarding the Partnership, MESA and MESA's business,
assets, results of operations, financial condition and prospects and the terms
and conditions of the Preferred Stock.
(b) Such Partner is acquiring its Partnership Interest solely by
and for its own account, for investment purposes only and not for the purpose
of resale or distribution; such Partner does not have any contract,
undertaking, agreement or arrangement with any person or entity to sell,
transfer or pledge to such person or anyone else any interest in the
Partnership; and such Partner does not have any present plans or intentions to
enter into any such contract, undertaking or arrangement.
(c) Such Partner acknowledges and understands that (i) no
registration statement relating to its Partnership Interest, the Preferred
Stock or the Common Stock into which the Preferred Stock will be convertible
has been or is to be filed with the Securities and Exchange Commission under
the Securities Act, or pursuant to the securities laws of any state; (ii) the
Partnership Interest, the Preferred Stock and the Common Stock into which the
Preferred Stock will be convertible cannot be sold or transferred without
compliance with the registration provisions of the Securities Act, or
compliance with exemptions, if any, available thereunder; (iii) any
certificates representing the Partnership Interests and all certificates
representing the Preferred Stock will include a legend thereon that refers to
the foregoing; and (iv) the Partnership does not have any obligation or
intention to register the Partnership Interests, the Preferred Stock or the
Common Stock into which the Preferred Stock will be convertible under any
federal or state securities act or law.
(d) Such Partner (i) is an "accredited investor" as defined in
Rule 501 of the rules promulgated pursuant to the Securities Act; (ii) has such
knowledge and experience in financial and business matters in general that it
has the capacity to evaluate the merits and risks of an investment in the
Partnership and the Partnership's purchase of the Preferred Stock and to
protect its own interest in connection with its investment in the Partnership
and the Partnership's investment in the Preferred Stock; (iii) has such a
financial condition that it has no need for liquidity with respect to its
investment in the Partnership or the Partnership's investment in the Preferred
Stock to satisfy any existing or contemplated undertaking, obligation or
indebtedness;
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<PAGE> 33
and (iv) is able to bear the economic risk of its investment in the Partnership
for an indefinite period of time.
(e) Such Partner has relied upon its own independent
investigations of the business of the Partnership and MESA or upon its own
independent advisers in evaluating its investment in the Partnership and the
Partnership's purchase of the Preferred Stock.
(f) The acquisition of the Preferred Stock by the Partnership at
the closings pursuant to the Stock Purchase Agreement shall constitute such
Partner's confirmation of the foregoing representations.
(g) Other than pursuant to its Partnership Interest (and with
respect to Brumley Partners, pursuant to options granted by MESA to one or more
of the partners of Brumley Partners), neither such Partner nor any of its
Affiliates owns, directly or indirectly, any shares of capital stock or other
securities of MESA or any of its subsidiaries.
SECTION 10.2. Power of Attorney. Each Limited Partner hereby
irrevocably constitutes and appoints the General Partner as its true and lawful
agent and attorney-in-fact, with full power of substitution, in its name, place
and stead, to make, execute and acknowledge, swear to, record, publish and
file:
(a) Any agreement, document or instrument pertaining to the sale,
transfer, conveyance or encumbrance of all or any portion of the property of
the Partnership in accordance with the terms of this Agreement;
(b) Any document or instrument with respect to the Partnership
that may be required or permitted to be filed under the laws of any state or of
the United States, or which the General Partner shall deem necessary, desirable
or advisable to file, including, without limitation, filings made pursuant to
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, or the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended;
(c) A counterpart of any amendment to this Agreement for the
purpose of admitting any substituted General Partner or additional Limited
Partner or substituted Limited Partner or effecting any amendment of this
Agreement permitted to be made solely by the General Partner hereunder; and
(d) Any document that might be required to effectuate the
dissolution, termination and liquidation of the Partnership or any document
that might be required to reconstitute the Partnership pursuant to Section 8.2
hereof.
The foregoing power of attorney is coupled with an interest, shall be
irrevocable and shall survive the death, incompetency, dissolution, merger,
consolidation, bankruptcy or insolvency of each of the Partners. The Partners
shall execute and deliver to the General Partner, within five (5) days after
receipt of the General Partner's request therefor, such further designations,
-28-
<PAGE> 34
powers of attorney and other instruments as the General Partner reasonably
deems necessary to carry out the purposes of this Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Notices. All notices, elections, demands or other
communications required or permitted to be made or given pursuant to this
Agreement shall be in writing and shall be considered as properly given or made
if given by (a) personal delivery, (b) United States mail, (c) expedited
delivery service with proof of delivery, or (d) facsimile transmission,
addressed to the respective addressee(s). Any Partner may change its address
by giving notice in writing to the other Partners of his or her new address.
SECTION 11.2. Amendment. This Agreement may be changed, modified or
amended only by an instrument in writing agreed upon by the General Partner and
a Super Majority Interest of the Limited Partners; provided, however, that no
such amendment that would have a material adverse economic effect on a
particular Partner will be binding on such Partner without the agreement of
such Partner. Notwithstanding the immediately preceding sentence, amendments to
this Agreement that, in the judgment of the General Partner, (i) are of an
inconsequential nature and do not adversely affect any Limited Partner in any
material respect, (ii) are necessary or desirable to comply with any applicable
law or governmental regulation, including but not limited to federal income tax
requirements, such as qualified income offsets, minimum gain chargebacks, or
otherwise, (iii) are necessary or desirable in the opinion of counsel to the
Partnership to ensure that the Partnership will not be treated as an
association taxable as a corporation for federal income tax purposes, or (iv)
are otherwise required or contemplated by this Agreement, including but not
limited to amendments of Exhibit A in order to reflect the admission of a
substituted or additional Limited Partner, may be made by the General Partner
without the written consent of the Limited Partners. The General Partner shall
notify all Partners upon final adoption of any proposed amendment.
SECTION 11.3. Partition. Each of the Partners hereby irrevocably
waives for the term of the Partnership any right that such Partner may have to
maintain any action for partition with respect to the Partnership property.
SECTION 11.4. Entire Agreement. This Agreement constitutes the full
and complete agreement of the parties hereto with respect to the subject matter
hereof.
SECTION 11.5. Severability. Every provision in this Agreement is
intended to be severable. If any term or provision hereof is illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity of the remainder of this Agreement.
SECTION 11.6. No Waiver. The failure of any Partner to insist upon
strict performance of a covenant hereunder or of any obligation hereunder,
irrespective of the length of time for
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<PAGE> 35
which such failure continues, shall not be a waiver of such Partner's right to
demand strict compliance in the future. No consent or waiver, express or
implied, to or of any breach or default in the performance of any obligation
hereunder shall constitute a consent or waiver to or of any other breach or
default in the performance of the same or any other obligation hereunder.
SECTION 11.7. Applicable Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by and interpreted,
construed and enforced in accordance with the laws of the State of Texas.
SECTION 11.8. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns; provided,
however, that no Partner may sell, assign, transfer or otherwise dispose of all
or any part of its rights or interest in the Partnership or under this
Agreement except in accordance with Section 9.1.
SECTION 11.9. Section 83(b) Election. Within 15 days from the date
of this Agreement, Brumley Partners shall furnish to the General Partner for
review and comment an election pursuant to Section 83(b) of the Internal
Revenue Code to include in income the value, if any, of its Profits Interest
which is subject to forfeiture pursuant to the terms of this Agreement, which
Section 83(b) election shall be filed with the Internal Revenue Service within
30 days from the date of execution of this Agreement.
SECTION 11.10. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be an original and all of which shall
constitute but one and the same document.
* * * * *
SIGNATURE PAGES OF PARTNERS ATTACHED
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<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
GENERAL PARTNER:
RAINWATER, INC.
By:/s/ Kenneth A. Hersh
-------------------------------
Kenneth A. Hersh,
Vice President
<PAGE> 37
LIMITED PARTNERS:
/s/ Richard E. Rainwater
-------------------------------
RICHARD E. RAINWATER
/s/ Darla D. Moore
-------------------------------
DARLA D. MOORE
The address of each such Limited Partner on this Signature Page is as follows:
777 Main Street
Suite 2700
Fort Worth, Texas 76102
<PAGE> 38
LIMITED PARTNERS:
COURTNEY E. RAINWATER TRUST
By: /s/ Mark L. Hart, Jr., Tr.
-------------------------------
Mark L. Hart, Jr., Trustee
RICHARD TODD RAINWATER TRUST
By: /s/ Mark L. Hart, Jr., Tr.
-------------------------------
Mark L. Hart, Jr., Trustee
MATTHEW J. RAINWATER TRUST
By: /s/ Mark L. Hart, Jr., Tr.
-------------------------------
Mark L. Hart, Jr., Trustee
The address of each such Limited Partner on this Signature Page is as follows:
777 Main Street
Suite 2700
Fort Worth, Texas 76102
<PAGE> 39
LIMITED PARTNER:
NATURAL GAS PARTNERS II, L.P.
By: G.F.W. ENERGY II, L.P., its general partner
By: GFW II, L.L.C., its general partner
By: /s/ John S. Foster
-------------------------------
Name: John S. Foster
Title: Authorized Member
The address of the Limited Partner on this Signature Page is as follows:
777 Main Street
Suite 2700
Fort Worth, Texas 76102
with a copy to:
115 E. Putnam Avenue
Greenwich, Connecticut 06830
<PAGE> 40
LIMITED PARTNER:
NATURAL GAS PARTNERS III, L.P.
By: RAINWATER ENERGY INVESTORS, L.P.,
its general partner
By: GFW III, L.L.C., its general partner
By: /s/ John S. Foster
-------------------------------
Name: John S. Foster
Title: Authorized Member
The address of the Limited Partner on this Signature Page is as follows:
777 Main Street
Suite 2700
Fort Worth, Texas 76102
with a copy to:
115 E. Putnam Avenue
Greenwich, Connecticut 06830
<PAGE> 41
LIMITED PARTNER:
VAN BEUREN ENTERPRISES, LLC
By: /s/ David J. Roy
-------------------------------
Name: David J. Roy
Title: Voting Manager
The address of the Limited Partner on this Signature Page is as follows:
330 South Street
P. O. Box 1975
Morristown, New Jersey 07962-1975
Attention: Donald R. Smith
with a copy to:
David J. Roy
1334 Park View, Suite 320
Manhattan Beach, California 90266
<PAGE> 42
LIMITED PARTNER:
BROOKVIEW-MESA HOLDINGS, L.P.
By: Osha Canyon Capital Corp.,
its general partner
By: /s/ J. Randall Chappel
-------------------------------
J. Randall Chappel, President
The address of the Limited Partner on this Signature Page is as follows:
777 Main Street
Suite 2700
Fort Worth, Texas 76102
<PAGE> 43
LIMITED PARTNER:
/s/ Gerald W. Haddock
-------------------------------
GERALD W. HADDOCK
The address of the Limited Partner on this Signature Page is as follows:
777 Main Street
Suite 2100
Fort Worth, Texas 76102
<PAGE> 44
LIMITED PARTNER:
GOFF FAMILY INVESTMENTS, L.P.
By: Goff Capital, Inc., its general partner
By: /s/ John C. Goff
-------------------------------
John C. Goff, President
The address of the Limited Partner on this Signature Page is as follows:
777 Main Street
Suite 2100
Ft. Worth, Texas 76102
<PAGE> 45
LIMITED PARTNER:
BRUMLEY PARTNERS, a Texas general partnership
By: /s/ Jon Brumley
-------------------------------
Jon Brumley, general partner
By: /s/ Jon Stewart Brumley
-------------------------------
Jon Stewart Brumley, general partner
The address of the Limited Partner on this Signature Page is as follows:
1400 Williams Square West
5205 North O'Connor Boulevard
Irving, Texas 75039-3746
<PAGE> 46
EXHIBIT A
<TABLE>
<CAPTION>
===================================================================================================================
Capital Pre-Payout Post-Payout
------- ---------- -----------
Name of Partner Contributions Sharing Ratio Sharing Ratio*
--------------- ------------- ------------- -------------
<S> <C> <C> <C>
Rainwater, Inc. $1,330,000 1.0000% 1.0000%
(General Partner)
Richard E. Rainwater $64,776,453 48.7041% 46.8546%
Courtney E. Rainwater Trust $2,000,054 1.5038% 1.4467%
Richard Todd Rainwater Trust $2,000,054 1.5038% 1.4467%
Matthew J. Rainwater Trust $2,000,054 1.5038% 1.4467%
Natural Gas Partners II, L.P. $8,255,842 6.2074% 5.9717%
Natural Gas Partners III, L.P. $11,744,166 8.8302% 8.4949%
Van Beuren Enterprises, LLC $32,494,959 24.4323% 23.5045%
Brookview-MESA Holdings, L.P. $5,128,347 3.8559% 3.7095%
Darla D. Moore $1,000,027 0.7519% .7233%
Gerald W. Haddock $1,135,022 0.8534% .8210%
Goff Family Investments, L.P. $1,135,022 0.8534% .8210%
Brumley Partners $0 0.0000% 3.7594%
- ------------------------------------------------------------------------------------------------------------------
TOTAL $133,000,000 100.0000% 100.0000%
==================================================================================================================
</TABLE>
- -------------------------
* Without giving effect to possible adjustments in the Profits Interest
pursuant to this Agreement.
